How does the PEA share savings plan work for CGT in France?

The Plan d'Epargne en Actions (PEA) is a French tax-advantaged share savings account for investing in European equities. The key tax benefit is that capital gains and dividends earned inside the PEA are exempt from income tax provided you do not make any withdrawals for at least five years from the date the account was opened.

Social charges of 17.2% are still due on gains at the time of withdrawal, even after five years. There is no income tax, however. Before the five-year mark, withdrawals trigger income tax on any gains as well. Early withdrawal before two years closes the account; withdrawal between two and five years closes the account but still results in favourable rates compared to standard investment accounts.

The contribution limit for a standard PEA is €150,000 (€225,000 for a PEA-PME focused on small companies). Investments are restricted to shares in EU/EEA companies or qualifying funds with at least 75% EU/EEA equity exposure.

After five years, withdrawals are fully flexible. Many investors keep the PEA open indefinitely to shelter ongoing gains and dividends from income tax, paying only 17.2% social charges on eventual withdrawals.